Dilemma: The Segregated Match

In his new book,The Complacent Class, Tyler Cowen re-emphasizes the role of economists in perpetuating pessimism. By connecting a slew of dismal trends backed by hard (and shaky) data, he offers a rationale behind the low levels of productivity, decreased economic mobility and low levels of economic growth. He categorizes the factors that make us seemingly FKD.

Challenging the prevailing rhetoric, technology (forgive my rather loose usage of the term), is not seeing the productivity gains everyone expected. Instead, it is making us a more stagnant, less-striving generation of people.

The matching culture

The big counter-narrative provided by Cowen is in the realm of matching. To be sure, platforms in the sharing economy, such as Uber, Airbnb and TaskRabbit, have all found ways to match people more efficiently; not to mention dating apps and sites such as Match.com, Tinder and Bumble (…the more efficient Tinder). These companies have made enormous efficiency gains by allowing us to get exactly what we want, when we want, from whom we want it.

Indeed, most of our everyday life revolves around us constantly making matches, and the Internet has made this much easier. We rarely eat at restaurants we don’t already know we’ll enjoy. We have access to millions of songs and videos, which saves us from wasting our stagnant wages on whole albums. On top of all that, the information we accumulate is tailor-made to suit our own biases and beliefs. We watch what we want, we listen to what we want and we read what we want.

This culture of getting matched with virtually everything is having some serious, dismal side effects. Cowen notes that we are segregating ourselves with what we already like, or conversely, what is already like us.

Segregated Matches

Residential segregation has risen over the last several decades as people of different social and income classes move to where people are “more like themselves.” Our “digital servants” are matching us with others of the same education level. Productive workers are easily recruited by the top firms. As a result, bubbles of wealthy, productive neighborhoods are forming but are inadvertently making it more difficult for those of a lower socioeconomic background to also get into these bubbles.

In an attempt to combat the high demand for productive areas, states have implemented rent controls and strict building codes in these highly productive areas, such as New York and San Francisco. But, unfortunately, these regulations only exacerbate the problem by making rents skyrocket even more!

This phenomenon becomes apparent, Cowen points out, with how these elitist clusters were completely blindsided by the 2016 election results.

Not everyone is winning

For those that are completely up-to-speed with a smartphone and digital skills, with the ability to exploit the plethora of apps and who can effectively make use of Google and other search engines to gather better and more information — you’re good. But, it’s not only Nana and Papaw who are not as savvy at using these tech tools. There are many accomplished and smart Boomers and Gen X’ers having a hard time getting the hang of all this stuff.

Another group of people that is hurting from this are those on the “losing side of the digital divide.” Folks and kids who come from a more impoverished home may not be as connected as those in the upper echelons of the economic ladder. This means they are not getting the necessary practice in zipping around the internet looking for opportunities to vastly improve their lives. We see the result of poor matching for folks with only a high school education by their high rates of divorce and family instability.

Takeaway

Stemming from this type of matching-segregation is a lack of innovation, productivity and economic growth, from a bird’s eye view. The gains from the “pro-matching technologies” seem to be suiting those who are already well-connected, due to being on the higher rungs of the economic ladder leaving the less connected behind. More importantly, it seems we are comfortable with it.

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Published by Kevin D. Gomez

Kevin D. Gomez is an Instructor of Economics at Creighton University and Program Manager at the Institute for Economic Inquiry. He received his B.S. in Economics and Statistics from Florida State University and his M.A. from George Mason University. Trying to pay it forward by helping noneconomists make sense of the crazy world.
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